Timing is always the problem with options because they lose their premium as they approach the expiration date. It's also just a matter of time before institutional investors and portfolio managers realize that QUALCOMM is the only telecom equipment firm without any major debt. And QUALCOMM is the only firm, by virtue of its patent portfolio, that can increase its margins during periods of slow overall growth. That's because the industry gradually is moving toward systems that depend on the QUALCOMM patents, and patent royalties have much larger margins than manufacturing, particularly in weak economic periods.
Because of the upward potential here, it's foolish, IMHO, to risk investment funds on the premise that a stock with no debt and far better than average margins is going to fall. Additionally, if there had been any unexpectedly bad news for the quarter ending March 31, QCOM would have been required to file notices with the SEC and the general public. Instead, what we have is a high probability of BETTER than expected results when quarterly earnings are released on April 24.
Finally, anyone who studies the whole telecommunications area should have no trouble realizing that this is not an investment favorite. Many investment firms recommend avoiding telecommunications altogether, and some even recommend avoiding the entire technology sector, in favor of such interesting growth opportunities as insurance companies, food and beverages, and department stores. When you see a company like IBM take a hit, then you know there's little interest in technology.
The difference between QUALCOMM and the others in its field comes down to basically two fundamentals: debt and operating margins. When this is better understood, and when the lemmings who purport to be smart investors change their view on technology and telecom stocks, you'll see some upward pressure on stock prices in the group. If I were short, I'd cover in a hurry.
Art |
